Wework grew from one office in 2010 to 52 offices in 2015, and then exponentially to 500+ offices in 32 countries – with over 100 in New York alone in 2019. Between 2016 and 2017, WeWork’s revenue grew from $436M to $886M. In 2018, revenue swelled to $1.8B, marking a second straight year of 100%+ revenue growth.
This incredible success took to the founders’ minds when they announced a valuation of $47 Billion, making it the biggest valuation just behind Uber’s. Neumann and McKelvey called a bluff, seeing the trend for large evaluations, but the once generous markets were now beginning to question their frivolousness.
At around the same time, Neumann’s personal life featured more prominently in the spotlight. He loved partying, walking barefoot in the office, and living life to the fullest. He dreamt of becoming the prime minister of Israel, or even ‘president of the world’ – a hope dashed perhaps when flight crew found a “sizable chunk” of marijuana “stuffed in a cereal box” onboard a private jet he took to Israel.
Questions were being asked about the ‘cult’ of Wework and its unconventional work culture. From the infamous tequila party after a round of layoffs – to the meat consumption ban (and later retraction to simply not reimbursing employees for meals containing meat), as well as the company’s (and his personal) involvement with Jewish mysticism and the cult of kabbalah.
Neumann might seem ambitious, but he was disoriented. He pursued too many ideas with no coherence. For example, WeWork spent $200 million to purchase meetup.com, and launched a preschool, WeGrow, with a staggering $40k/year tuition rate. On a personal level, he invested in several companies including a life-extension startup Life Biosciences LLC – to fulfil his dream of living forever.
In a webcast to his staff in the hours after news broke of the delayed IPO, Neumann “told employees he had been ‘humbled’ by the aborted initial public offering of his lossmaking property group, admitting he needed to learn lessons about running a public company,”
To the end, Adam remained defiant. This is perhaps what got him off lightly and handed a very generous golden parachute. On a larger scale, however, the failure of Wework put an abrupt stop to eye-watering investments on personalities and influencers, forcing VCs instead to think back to the fundamentals of brand value.